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Financial Encyclopedia

Enterprise Value


Enterprise Value (EV) is the fair value of the company, which indicates to the investor how much it is necessary to pay for the company. 


The capitalization of Rosneft is 4.08 trillion. rub.


The total value of debt obligations as of December 31, 2021 is 4.7 trillion. rub. , and cash and equivalents are equal to 0.65 trillion. rub.


This means EV = 4.08 + 4.7 - 0.65 = 8.13 trillion. rub.

More detailed

The indicator is calculated according to the formula:

Enterprise Value = Market capitalization + Long-term & Short-term debt - Cash and cash equivalents


EV is required for:
1. valuation of the company when buying/selling or taking over
2. calculation of the amount of collateral for insurance/crediting;
3. business restructuring/liquidation operations;
4. understanding the company's place among competitors from the same industry.


Enterprise value is an important indicator for company owners, but for an investor, comparison with other indicators is more important, as this gives more information about the current state of the business and its prospects. There are such multiples as EV/EBITDA, EV/Sales, EV/EBIT, etc.

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